Cost of Running a Car UK 2025: Petrol, Diesel & EVs Costs

Meta Description: The cost of running a car in the UK isn’t cheap, as you have to fill up, book an MOT, and renew your car insurance. That said, keeping a car on the road needs real commitment. On average, it costs between £3,500 and £4,000 per year (approx. £300/month) to run a typical petrol hatchback in the UK. This includes insurance (£735 avg), fuel (~£1,200), VED, servicing, and depreciation.

In this guide, we break down every penny you’ll spend and 5 ways that help to cut your running costs.

Key Takeaways: Cost of Running a Car in the UK

Fixed costs like depreciation, insurance, and tax dominate running a car, while fuel, servicing, and maintenance vary. EVs save with home charging, and careful planning reduces annual UK car costs.

• Fixed costs matter most: depreciation, insurance, and vehicle tax are unavoidable and make up a large portion of your annual spend.

• Variable costs depend on you: Fuel or electricity, servicing, MOTs, and maintenance fluctuate with mileage, driving style, and car type.

• Electric cars can be cheaper, but… Home charging makes EVs cost-effective, while relying on public chargers can be more expensive than petrol.

• Use simple formulas to plan: Calculate your annual cost or cost per mile to see the real numbers for your driving habits.

• Smart choices save money: Driving efficiently, keeping up with maintenance, shopping for insurance early, and choosing the right car model can significantly reduce costs.

• Budget realistically: For an average UK car, running costs are around £3,500–£4,000 per year (~45–55p per mile), but your actual costs may be higher or lower depending on car type, location, and usage.

Fixed Costs of Running a Car in the UK

When you own a car, some costs don’t change. These are your fixed costs, which account for a significant portion of your annual expenses. Understanding them helps you plan your budget effectively.  

Depreciation

Depreciation is often ignored because no physical money leaves your bank account each month until you sell your car. It is the single biggest cost of motoring.

The reality is that a new car typically loses 15% to 20% of its value in the first year, then steadily each year after. For example, a £20,000 car could be worth only £14,000 after one year.

However, depreciation slows down significantly after year three. Buying a 3-year-old car means the previous owner has paid for the steepest drop in value.

As a 2025 trend, Electric vehicles (EVs) have seen steeper depreciation recently due to market fluctuations and battery tech updates, while small, efficient petrol cars, like the Toyota Aygo or Dacia Sandero, are holding value exceptionally well.

Car Insurance Costs

Car insurance is one of the biggest fixed costs. After a turbulent 2024, insurance prices are stabilising, but they remain a major burden. As of now, the average premium for experienced drivers is approximately £600 – £800 per year. However, for young new drivers, insurance costs range between £1,600 – £2,200+ 

Vehicle Tax (VED)

After the April 2025 update, the road tax rules have changed. If you drive an electric car, the “free road tax” era ends in April 2025. Here is what you should know about road tax:

Variable Costs of Running a Car in the UK

While fixed costs stay the same regardless of how much you drive, variable costs change based on your mileage, driving style and the type of car. 

Fuel/Energy

Fuel prices have stabilised around 135p-145p per litre for petrol and slightly higher for diesel. However, the gap between “home charging” and “public charging” for EVs is now massive.

• Petrol Car (45mpg): Costs approx. 16p – 18p per mile.
• Electric Car (Home Charging): Costs approx. 2p – 5p per mile (on an off-peak EV tariff).
• Electric Car (Public Rapid Charging): Costs approx. 15p – 20p per mile (often more expensive than petrol).

Servicing, MOT and Maintenance

Cars need regular attention to stay safe and reliable. These are variable costs because they depend on your car’s age, condition, and mileage:

• MOT: Capped at £54.85 (no VAT). You need this annually once your car is 3 years old.
• Servicing: Expect to pay £180 – £260 for a full service on a standard hatchback.
• Maintenance Fund: As cars age, parts fail. If your car is over 5 years old, we recommend setting aside £30 – £50 per month for tyres, brake pads, and unexpected repairs.

Cost Comparison: Petrol vs Diesel vs Electric Cars

Not all cars are the same to run. It depends on your choice of fuel type, like petrol, diesel and electric. Each makes a big difference in your annual costs. Here is the comparison table for better understanding whether you should consider buying an electric car in 2025 or not.

Verdict: An EV is the cheapest option by far, only if you have a driveway. If you rely entirely on public chargers, a petrol hybrid is often cheaper to run.

How to Calculate Your Own Car Running Costs (Step-by-Step)

Knowing the exact cost of running your car helps you plan your budget realistically. Here’s a simple way to calculate it.

Simple Formula for Annual Cost

(Fuel Cost x Miles) + Insurance + Tax + Servicing + Finance Payments = Total Annual Cost

Formula for Cost Per Mile

This figure is useful for deciding if a specific journey is worth driving.

Total Annual Cost ÷ Annual Mileage = Cost Per Mile

Example: If you spend £3,500 a year and drive 7,000 miles, every single mile costs you 50p. That 10-mile round trip to the shops just cost you £5.00.

How to Cut Your Running Costs

1. The “Pre-2017” Tax Trick: Buying a low-emission petrol car registered between 2001 and March 2017 often results in road tax of just £0, £20, or £35 per year.
2. Service Plans: Main dealers often offer monthly service plans (e.g., £20/month) that are inflation-proof. These are excellent value in 2025 as labour rates rise.
3. Tyre Choice: Don’t buy “budget” ditch-finder tyres. Premium tyres last longer and improve fuel economy. Mid-range brands (like Kumho or Falken) offer the best cost-per-mile balance.
4. Shop Insurance 21 Days Early: MoneySavingExpert data suggests the “sweet spot” for renewal quotes is 3 to 4 weeks before your policy expires. Never auto-renew.

Frequently Asked Questions

Is it cheaper to run an electric car in 2025?

It depends on where you charge. If you have a home wallbox and a smart energy tariff (charging at ~7p/kWh), it is roughly 70% cheaper to fuel than a petrol car. However, if you rely on motorway rapid chargers, it can actually be more expensive than petrol.

What is the average cost per mile in the UK?

For a typical family car, the “all-in” cost (including depreciation) is usually between 45p and 55p per mile. If you only count fuel, it is around 15p-18p per mile.

How much should I budget for car maintenance?

For a car under warranty, less than 3 years old, budget for one service a year is £200. For cars aged 5-10 years, budget roughly £500-£700 per year to cover the service, MOT, tyres, and typical wear-and-tear items like brakes or suspension bushes.

How much is the average insurance for a new driver?

In 2025, new drivers are facing average premiums of £1,600 to £2,200. Adding an experienced named driver (like a parent) to the policy can sometimes reduce this significantly.

What are the cheapest cars to run in the UK?

The cheapest cars to run in the UK are the Toyota Aygo / Aygo X, the Kia Picanto, or the Dacia Sandero. They have low insurance groups, high MPG, and tyres that are cheap to replace.

Conclusion: Cost of Running a Car UK

Understanding the cost of running a car in the UK helps you plan your budget and avoid surprises. Fixed costs like insurance, tax, and depreciation are unavoidable, while variable costs such as fuel, servicing, and maintenance depend on how and where you drive.